Should Nigeria protect people from gambling addiction?

Gambling is big business in Nigeria, generating around N250 billion ($600 million) annually. Until now, the market has remained poorly regulated, a situation that is good for neither the country nor those Nigerians who participate in gambling activities.

Recently the government has been engaged in a concerted effort to consolidate existing regulation and establish legislation that covers all types of gambling in Nigeria. With Germany recently passing laws to protect gamblers and tap into the available revenue, can the Nigerian authorities learn from their example?

Growth of Nigerian Gambling Industry

Gambling has long been a popular pastime in Nigeria, and the emergence of online casinos and sports betting operators has served to further boost its prevalence. Betting on football is especially widespread, with some studies suggesting that as many as 70% of Nigerian youths regularly put money on match outcomes.

The money spent on gambling continues to rise year by year, as more operators enter the market. Betting companies can expect to bring in around triple of what they spend, making it a very lucrative prospect. Although there are many licensed and sanctioned gambling providers in the country, much of the money spent goes to illegal casinos and bookmakers.

Current Regulation

Current legislation appears to be unfit for purpose, with a number of different gambling laws operating on state and national levels. Gambling providers pay relatively high fees to secure a license, along with multiple taxations to the various regulators. This state of affairs only serves to encourage illegal operators.

Online gambling, which represents a large chunk of the gross gambling revenue (GGR), is entirely unregulated. Officially, online casinos are banned throughout Nigeria, meaning that there are no local operators. In practice, nothing is done to prevent gamblers using overseas sites.

Effects of Regulatory Shortcomings

The effect of this is threefold. First, the government sees none of the profits from illegal and online gambling establishments. Around the world gambling is taxed and the revenue can be used to fund state coffers, but in Nigeria less than half a percent of GGR finds its way to municipal causes. Contrast this with the US, where around 30% of gambling revenue is funneled to the state, and it is clear that Nigeria is missing a vital source of income.

The second effect of having such an unregulated market is a total lack of player protection. In jurisdictions where controls are tighter, there is a strong focus on discouraging problem gambling and supporting those whose habits get out of hand. Contrast this with Nigeria, where it is estimated that many people regularly bet almost 10% of their monthly income on sports matches, and it is clear that responsible gambling measures are needed in the country.

In addition, online gamblers can easily fall prey to rogue operators in the current circumstances. While many of the providers are fully licensed and safe, it is easy for unlicensed casinos and sportsbooks to find customers in an unregulated market. These sites often swindle their players with rigged games or by refusing to honor payouts.

Finally, lack of regulation opens the doors to uncontrolled money-laundering. This is clearly not something that the Nigerian authorities wish to encourage, so it is important to take steps to reduce such illegal activities.

Germany’s New Laws Show the Way for Nigeria

German gamblers had unfettered access to foreign gambling sites, while local laws covered a few land-based establishments and largely ignored the existence of online casinos.

The changes that came into effect in July 2021 have been sweeping and, in some observers’ opinions, rather too strict. The Interstate Treaty on Gambling permits operators to purchase a five-year license, the same length as those issued to Nigerian casinos and betting shops, provided that they comply with a number of stringent rules. MrCasinova in Germany, a gambling news portal, reports that this new framework has changed the online casinos they tested in various ways.

Many of these rules focus on so-called responsible gambling, such as low limits on monthly deposits, casino bonuses restricted to a value of €100 (just under 50,000 naira) per year, and no in-game betting on sports matches. As well as this, there are many specific rules about game functionality, such as the stipulation that a single spin on a slot game must last no less than five seconds.

While the responsible gambling measures have received a lot of support, the feedback on new taxation has been less favorable. Germany has chosen to tax players directly, docking 5.3% of each stake. There is a reason, experts say, that other countries have not chosen to impose tax this way; players will be encouraged to continue using black market sites where they do not have to surrender a portion of their deposited cash whether they win or lose.

Lessons for Nigeria

For the reasons that we have already discussed, it is clear that Nigeria’s gambling laws are sorely in need of reform. The National Gaming Conference that took place in Lagos in July 2021 was just one of the recent steps taken towards acquiring a central monitoring system to oversee gambling nationwide and legitimize iGaming providers.

Handled correctly, gambling can provide money for state projects as well as a source of employment for thousands of Nigerians. The conference examined how to go about achieving a strong iGaming sector while keeping players safe and eliminating illegal activities. Another positive step towards this goal is the collaboration between the Lagos State Lotteries Board and acclaimed online training experts iGaming Academy. The collaboration will assist those working in the sector to learn about international compliance standards, especially around responsible gambling and anti-money laundering protocols.

Nigerian officials should also look to Germany, and take note of how their new treaty affects the sector and how successful the measures are, both in terms of profit and player protection. The direct tax on players is one aspect of the German legislation that should be avoided, as players will have little incentive to use locally licensed gambling sites or establishments as long as black market alternatives still exist.

Source: punchng.com

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